In June 2022, the Northern Territory Department of Environment, Parks and Water Security (DEPWS) released a consultation draft of the Environment Protection Legislation Amendment (Chain of Responsibility) Bill 2022 (NT) (Bill). The Bill has significant impacts on the liability of directors, associated entities, financiers, shareholders and others for environmental offences but only in relation to petroleum activities at this time. Submissions on the Bill are due by 3 August 2022.

Snapshot

  • The first question is whether your business is a high risk entity with a petroleum activity?
  • The second question is what related person would be liable even though they are not the holder of an environmental approval?
  • The third question is whether that related person has a relevant connection to the high risk entity?

What would happen if the Bill passed?

The DEPWS could issue a compliance notice to any related person with a relevant connection to a high risk entity for a petroleum activity. The Bill is retrospective to capture any compliance notices issued to high risk entities in the last 3 years and also in future will allow the DEPWS to issue a compliance notice to a related person even if the high risk entity has not been issued a compliance notice. We set out below the key defined terms so you can consider how the Bill may impact your business.

What is a ‘high risk entity’ and a ‘petroleum activity’?

A ‘high risk entity’ is a corporation under administration or bankrupt, that has applied to take the benefit of a law for the relief of bankrupt or insolvent debtors, or has compounded with creditors, or made an assignment of renumeration for their benefit.

A ‘petroleum activity’ means an exploration permit, retention licence, production licence under the Petroleum Act 1984 (NT) or a permit or lease under the superseded legislation.

What is a ‘related person’?

A ‘related person’ is a person that is a holding entity of the high risk entity, an associated entity of the high risk entity, or is the owner or occupier of land on which the high risk entity carries out a petroleum activity.

A person will also be a related person if the CEO of DEPWS decides that the person has a ‘relevant connection’ to the entity.

What is a ‘relevant connection’?

For the CEO of DEPWS to decide whether there is a ‘relevant connection’ between a person and a high risk entity, they must consider the extent to which the person is in a position to influence the high risk entity’s conduct in relation to the mode and extent of compliance with an environmental approval. Further considerations include the person’s control and position within the high risk entity as well as their financial interest in the entity.

How can HSF assist?

If passed, the Bill will have significant implications for the potential liability of persons associated with businesses undertaking petroleum activities in the Northern Territory. We can assist by providing your business tailored advice on the impacts of the Bill together with assisting your business to make a submission before 3 August 2022.

It is anticipated that the Bill will be introduced into the Legislative Assembly of the Northern Territory in late 2022.